Assume That a Firm Issues a Six-Month Note to Purchase

question 120

Multiple Choice

Assume that a firm issues a six-month note to purchase inventory.Which of the following is true if the current ratio before the purchase is 1.0?

• A) The firm's current ratio must decrease.
• B) The firm's quick ratio will stay the same.
• C) The firm's current ratio will increase.
• D) The firm's quick ratio might decrease.

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Definitions:

Europe

A continent located entirely in the Northern Hemisphere and mostly in the Eastern Hemisphere, comprising various countries and cultures.

U.S. Marriages

The legally or formally recognized union of two people as partners in a personal relationship, within the cultural and legal framework of the United States.

Divorce

The legal dissolution of a marriage by a court or other competent body, officially ending a marital union.

Years

Units of time that represent the period it takes for the Earth to complete one orbit around the Sun, roughly 365 days.